DC Improves From Last Year In Key Investment And Development Rankings

One of the most highly respected surveys of real estate professionals came out last week, and it offers a fascinating window into how those in the industry view the DC area's real estate prospects.

Urban Land Insitute's Emerging Trends in Real Estate survey compiles responses from more than 1,500 industry professionals and ranks 78 markets, splitting the DC Metro region into three—The District, Northern Virginia and Suburban Maryland.

Overall Real Estate Prospects

Perhaps the most telling of the rankings, this asks all 1,500 respondents to rate each of the 78 markets on investment and development prospects. Texas topped the charts here, with Dallas/Fort Worth No. 1 for development and Austin No. 1 for investment.  

Investment Rankings

• District: No. 21 (No. 28 in 2015)
• NoVa: No. 30 (No. 24 in 2015)
• MD Suburbs: No. 34 (No. 62 in 2015)

The District received the highest rating for investment of the three local markets and improved from last year. The graph below shows how the District's investment rating has changed since 2005. It largely avoided the recessionary drop most cities experienced, instead taking the biggest hit after sequestration in 2013. The most notable change from last year is the Maryland suburbs, which shot up from being near the back of the pack last year to the top half, while NoVa ticked down in the rankings.

Development Rankings

• District: No. 28 (No. 39 in 2015)
• NoVa: No. 29 (No. 41 in 2015)
• MD Suburbs: No. 33 (No. 56 in 2015)

The development rankings show a similar story, but all three markets improved over last year. The District was the best of the three, by a hair, and the Maryland suburbs again saw the biggest jump. 

Buy, Sell Or Hold? 

The next component of the rankings asked respondents if they would buy, sell or hold a specific asset class in each market. It then ranked the 20 with the highest "buy" rating. The District cracked the top 20 for each asset class, with its best nationwide rankings coming in the retail and hotel classes, each at No. 4. 

Industrial 

District: 32% buy, 56% sell, 12% hold (No. 19 for buyers)

Respondents were most bullish on Baltimore industrial with 65% saying they would buy and just 26% saying sell. Luckily for these investors, leaders in Baltimore's industrial sector offered five tips on how to get industrial deals done at Bisnow's event last week. 

Office Property

District: 27% buy, 62% sell, 12% hold (No. 20 for buyers)

Brooklyn was ranked as the best market to buy office property, with its 53% buyer rating a full 10 points higher than the next closest market, Oakland. 

Retail 

District: 43% buy, 43% sell, 15% hold (No. 4 for buyers)

MD Suburbs: 36% buy, 45% sell, 18% hold (No. 11 for buyers)

The District's strong retail rating came in just one point behind the leader, Denver, which had 44% of respondents pick buy, and tied with Fort Lauderdale and Seattle. The Maryland suburbs posted their best ranking, coming in ahead of Philadelphia, Manhattan and Boston for retail buyers. 

Hotel 

District: 24% buy, 53% sell, 24% hold (No. 4 for buyers)

The top city to buy hotel property was Boston by a wide margin. 35% of respondents said they would buy there, followed by 25% for Baltimore, and 24% for both Seattle and the District. 

Multifamily 

District: 30% buy, 53% sell, 17% hold (No. 16 for buyers)

MD Suburbs: 30% buy, 56% sell, 14% hold (No. 17 for buyers)

NoVa: 29% buy, 58% sell, 13% hold (No. 19 for buyers)

The hottest city to buy multifamily property was San Antonio with 61% selecting buy, followed by Fort Lauderdale, San Diego and Miami. All three DC-area markets cracked the top 20, but the highest ranking was 16 and each market still had a majority who think it's a seller's market. 

Local Market Perspective

This component of the survey polled only local participants to rate their own market from 1-5 on a variety of factors, and then ranked the 78 markets on their average score for each metric. The District's best ratings were for investor demand and availability of debt and equity capital. NoVa ranked higher than the District in development opportunities, local public and private investment, and local economy, while the MD Suburbs ranked below the other two local markets in all categories. 

Investor Demand

• District: 4.21 (No. 16)
• NoVa: 3.79 (No. 30)
• MD Suburbs: 3.57 (No. 45)

Development/Redevelopment Opportunities

• NoVa: 3.58 (No. 28)
• District: 3.51 (No. 34)
• MD Suburbs: 3.28 (No. 56)

Availability of Debt and Equity Capital:

• District: 4.19 (No. 9)
• NoVa: 3.85 (No. 28)
• MD Suburbs: 3.77 (No. 33)

Local Public and Private Investment:

• NoVa: 3.62 (No. 16)
• District: 3.44 (No. 38)
• MD Suburbs: 3.25 (No. 54)

Local Economy

• NoVa: 3.78 (No. 39)
• District: 3.76 (No. 40)
• MD Suburbs: 3.58 (No. 47)